Question

The most rigorous test of liquidity is –
(A) Current ratio
(B) Quick ratio
(C) Absolute liquid ratio
(D) All of the above

Answer 1

The most rigorous test of liquidity is –

(C) Absolute liquid ratio.

In layman's terms, the absolute liquid ratio can be defined as the relationship that is shared between "absolute liquid assets and current liabilities".

The most optimum ratio is 1:2.

It is a relationship that is estimated and established between assets and liabilities.

• Assets are properties owned by an individual or company that can pay debts.
• On the other hand, liabilities are ones for which the owner is responsible or for which the owner is expected to make a payment.

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Answer 2

Answer:

(C) Absolute liquid ratio.

Explanation:

The most rigorous test of liquidity is –Absolute liquid ratio

In layman's terms, the absolute liquid ratio can be defined as the relationship that is shared between "absolute liquid assets and current liabilities".

1. The most optimum ratio is 1:2.
2. It is a relationship that is estimated and established between assets and liabilities.
3. Assets are properties owned by an individual or company that can pay debts.
4. On the other hand, liabilities are ones for which the owner is responsible or for which the owner is expected to make a payment.

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